In Battle For Thomas Kinkade Estate, Girlfriend Doesn't Have A Prayer

Updated Dec. 20, 2012. All the legal issues described in this story have been settled. Terms of the settlement are confidential.

During his life, Thomas Kinkade painted bucolic scenes of cozy cottages, gardens, streams, villages and rural churches. The story of what has transpired since his death in April at the age of 54, from an accidental overdose of alcohol and Valium, is far less idyllic.

His wife Nanette Kinkade, from whom he was separated after 30 years of marriage, is embroiled in a will contest with his girlfriend Amy Pinto, who he was living with when he died. Pinto, 48, has laid claim to the former family home in Monte Sereno, Calif. that she occupied during her 18-month relationship with Kinkade, $10 million in cash and a hand in the artist's legacy. The San Jose Mercury news reported that "security guards have been stationed inside the gates day and night" to make sure she doesn't steal anything.

The drama of the painter, the wife and girlfriend has spilled into court documents in which Pinto describes, among other things, being excluded from the funeral of the man she loved and planned to marry. Passion oozes from the page, but that doesn't mean she'll win the will contest. Court papers lay out a tangled fact pattern worthy of a law school exam. It's a cautionary tale about personal finance and estate planning.

The case involves “a lot of money and two very stubborn women who have an incredible distaste for each other,” says Mountain View,
CA lawyer Douglas W. Dal Cielo, when asked whether his client, Pinto, might settle. "This isn't a business dispute where emotions can be kept in check.” Through their lawyers, both women declined to comment, but the expanding files of court papers speak volumes.

Both the wife and the girlfriend have applied for probate–the process through which a court determines that a will is legally valid and approves the distribution of assets covered by that will. The 2000 will that Nanette Kinkade submitted to the probate court in Santa Clara county, is what you might expect from an artist who described himself as the “Painter of Light” and managed to trademark the term as used in this context. It leaves an estimated $12.48 million worth of assets covered by the will to a living trust that Kinkade set up in 1997. (The couple had four daughters, two of whom are minors.)

The living trust, which unlike a will is not a public document, already contains most of the assets that Kinkade left behind, says Daniel L. Casas, the Los Altos, Calif. lawyer who represents the family. That includes original art, intellectual property rights, and shares in Thomas Kinkade's business.

In contrast, Pinto submitted two handwritten documents that together she says left $66.3 million worth of assets, most of it art, and directed her to set up a museum. Why the discrepancy in the numbers? She assumes the family underestimates how much Kinkade owned outside the trust.

Handwritten, or holographic, wills are valid in about half the states, though they are most common in situations involving sudden death, and exact requirements vary. In California, for example, a will must be written completely in the person's own handwriting and be signed. In court papers, Pinto argues that the holographs are valid.

If a court agrees, the burden of proof will shift to Kinkade's family to raise the two most common grounds for contesting a will. One is undue influence, which refers to efforts to coerce someone to sign estate-planning documents that favor one beneficiary over others. Another is the argument that the person lacked capacity when signing the document. The court could toss out the holographs on either of these grounds.

Meanwhile, the scrawl is so difficult to read that court documents include a transcription. This is the one dated Nov. 18, 2011:

"I, Thomas Kinkade, being of sound mind and body do hereby bequeath to Amy Pinto Walsh $10,000,000 in cash from my corporate policy and I give her the house at 16324 and 16342 Ridgecrest Avenue for her security."

Assuming this document is valid, Pinto still isn't home free. The holograph refers to $10 million in proceeds from a life insurance policy, and that's an asset that does not pass under a will or a living trust. (The same goes for retirement accounts such as an IRA or 401(k).) Instead, the payout at death is distributed to the beneficiary named on the policy. To make Pinto a beneficiary, Kinkade would have needed to change the policy directly--something he didn't do.

There's a stronger argument that the house and the adjacent building (with a different address) that Kinkade used as a studio, were his to give away, but it's complicated. California is one of nine community property states. (The other eight states are: Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.) If you are domiciled in one of these states, meaning that you call it home, you are subject to the rules of community property. According to these rules, anything you have going into the marriage or individually receive by gift or inheritance during the marriage is considered separate property. Most of what you acquire once you are married and living in a community property state is considered community property, and you are each considered a one-half owner. That includes your house, regardless of how it is titled. (For more about the importance of community property in financial planning, see my post, "Mark Zuckerberg Ties the Knot, But It Isn’t All Love And Roses.")

The law in most community property states allows you and your mate to enter into an agreement – either before or after you’re married – specifying that certain property that would otherwise be considered community property should be treated as separate property, and the reverse. Nanette and Thomas Kinkade had not completed their divorce at the time of his death and many of their assets were still co-owned.

One subject they did cover was the house and studio, which according to papers filed in the will contest together are valued at more than $7 million; there's a $2.2 million mortgage on the house. In Nov. 2010, as part of their separation, the couple filed a stipulation about ownership of the house, which they called "Ivy Gate." It provided for transfer of title to Thomas Kinkade in exchange for payment of $1.2 million to Nanette. Here too, there are some loopholes, but there's at least a chance that if the handwritten will is valid (and that's a big if), Pinto might get to keep the house.

But wait, there's a second, even more illegible, handwritten document, dated Dec. 11, 2011, that Pinto also submitted for probate:

“I, Thomas Kinkade, hereby bequeath my house at 16324 Ridgecrest Avenue, Monte Sereno, CA to Amy Pinto in the event of my death. I also give the sum of $10,000,000 to Amy Pinto to be used for the establishment of the Thomas Kinkade Museum at 16324 Ridgecrest Avenue, Monte Sereno CA for the public display in perpetuity of original art. This statement is null and void if my relationship with Ms. Pinto ends as it is defined by me in a future letter.”

Is Kinkade referring here to the same $10 million described in the document one month earlier as "for her security?" Her lawyer says no—this is a separate a gift, but he expects some pushback on that point from the other side. Did Kinkade have $10 million worth of his own cash that he could have left for this purpose? (“Stay tuned,” says Dal Cielo.)

And where does it say that Kinkade was giving her art? Dal Cielo reads that into the words "for the establishment of the Thomas Kincaid Museum. . .for the public display in perpetuity of original art," and says he plans to present testimony and California case law to support his position.

What makes him think that the assets aren't already held by the living trust and therefore out of reach? Such a trust, which would operate as a will substitute in this context, determines who will receive property when the trust creator dies. Kinkade's 2000 will also contained what's called a "pour over" provision, directing that, after certain distributions have been made, all remaining assets be paid to that trust.

Dal Cielo declined to comment except to say Kinkade's intent was clear from the evidence.

While the will contest is pending, the probate court has set a Sept. 17 hearing to address the question of whether Pinto should be required to move out of the house or pay rent. The two women are also battling over whether the will contest should be submitted to binding arbitration, and whether the court should appoint a neutral third party (rather than either of them) to administer the estate.

All this adds to the lawyers' tab. Dal Cielo wouldn't comment on his fee arrangement with Pinto, but when a client can't foot the bill, some lawyers take such cases on contingency—agreeing to be paid a percentage of whatever they win on the client's behalf. Casas, the lawyer for the family, says it could be more than a year before a court could even consider whether the holographs are valid. He'd like to settle, but says there's no chance of that until Pinto moves out of the house.

What can others learn from this sad tale? The time between a separation and divorce is tricky, estate-wise. By law, spouses are entitled to inherit a minimum portion of each other’s assets (a third to a half, depending on the state), and unless they waive that right in a prenuptial agreement, it continues until the divorce is finalized. So it's best for those who have separated to immediately revise their wills and trusts to leave the soon-to-be-ex no more than the required minimum.

You won’t be able to change your 401(k) since by federal law that money goes to a spouse, unless he or she has signed a form giving up rights to it. And in many states once a divorce is started you can’t change the beneficiaries of a life insurance policy or IRA until it is finalized.

Words to the wise for those in extramarital relationships, too. (See Seattle lawyer Wendy Goffe's post, "12 Estate Planning Questions That Might Make You Squirm.") Charles Kuralt, the CBS News correspondent and anchor who died in 1997, had an intimate relationship with Patricia Elizabeth Shannon for 29 years that remained a secret from his wife and adult daughters. After he died, they became embroiled in a a six-year, public court battle over land in Montana.

Once the court awarded Shannon the property, valued at $600,000, several more rounds of legal battles followed over who was responsible for paying the federal estate taxes on it. The Montana Supreme Court ruled in 2003 that the taxes should come out of the daughters’ share. Kuralt’s wife died in 1999 while the dispute was pending.